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President Obama thanked Gov. Arnold Schwarzenegger and state legislators on Friday for their passage of the California Health Benefits Exchange Legislation, making California the first state to set up a crucial component of the new health care law.

“They are taking an important early step toward reforming our private insurance marketplace so that California families and small businesses will have high quality and affordable health insurance choices in 2014 when reform is fully implemented,” Obama said in a statement on Friday.

Schwarzenegger signed the bill on Thursday after the White House lobbied this week for its passage. On Thursday, the Health and Human Services Department said California would get $1 million to put in place its private exchange markets, along with 47 other states who would get up to that amount.

The California exchange would not go into effect until 2014, but the new law establishes an independent, five-member oversight board that will determine how the exchange will work.

“I look forward to continuing to work with and provide resources and support for all states as we work toward creating a new competitive health insurance system that lowers costs for consumers and businesses, increases quality, and reduces our deficits,” Obama said.